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Thursday, September 29, 2022

The Bank of England has set the interest rate 50 bp. magnified

The Bank of England (BOE, for its abbreviation in English) raised its reference interest rate from 1.75 to 2.25% and reaffirmed that it would continue to “forcefully, necessarily react” to inflation, despite the slowdown in the economy.

The BoE also projected that the UK economy would contract 0.1% in the third quarter, which combined with a fall in output in the second quarter met the definition of a technical recession.

“If the outlook suggests more persistent inflationary pressures, including higher demand, the committee will respond forcefully,” the BoE said, using a formula similar to previous months to refer to its comments. political intentions.

The financial institution now forecasts a maximum inflation of 11% in October. Consumer prices fell from 10.1% in July to 9.9% in August, their first drop in nearly a year.

Economy Minister Quasi Quarteng will give more details on the budget plans today.

Norway joins

Norway’s central bank also raised its benchmark interest rate by 50 basis points (bps) to 2.25%, as expected by most economists, and said future hikes would be more gradual.

According to economists, Norges Bank had forecast the possibility of raising the rate again in November, but its forecast on the trajectory suggests a marginal increase.

The interest rate, which is at its highest level since 2011, will rise to 3% during the winter, the bank said, adding that projections are more uncertain than usual.

The official interest rate was at zero a year ago and the increase is already beginning to have a restrictive effect on the Norwegian economy, Norges Bank explained and “this may suggest a more gradual strategy in setting official interest rates in the future”.

Nordea Markets conceded that “the recent trajectory of rates suggests an increase of 25 bps in the future and is on the softer side of the market’s forecast”.

Switzerland leaves negative rates

For its part, the Swiss National Bank (SNB) took a turn in its monetary policy and announced an increase in its key rate of 75 bp to set it at 0.5%, with the aim of turning a seven-year negative rate of return. terminated. Fight against inflation affecting the country

To ensure price stability in the medium term, the SNB does not rule out further hikes. Although less than 9.1% in the euro area, inflation rose to 3.5% in August (the highest since 1993) due to higher energy prices.

Despite 80% inflation

and Turkey reduced it to 12%

Turkey’s central bank on Thursday cut its main interest rate from 13% to 12% for the second straight month, as the Turkish pound hit its lowest level against the dollar on record.

The Turkish currency was trading higher on Thursday morning at 18.38 pounds per dollar, a level never reached before.

The central bank, which last month slashed its key rate by one percentage point, once again justified its decision, citing “uncertainties about global developments and geopolitical risks”.

In June, Turkish President Recep Tayyip Erdoan (who prioritizes growth and exports over price stability) called for further cuts in interest rates after several months of stability.

Contrary to classical economic theories, the President of Turkey believes that higher interest rates favor inflation. As a result of his highly criticized monetary policy, the Turkish pound is in free fall.

Central bank intervention and the announcement of a support measure for the Turkish pound in late June had little effect.

World Nation News Desk
World Nation News Deskhttps://worldnationnews.com/
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